A Few Thoughts on the Economy

*This post was written on more than a year ago on 9/12/08, but was left in my drafts, because I wanted to do a more in depth treatment of the subject. I decided to publish it as I was cleaning out my blog drafts, because I realize that much of what I said at the time has proved to be increasingly relevant and true. I did not alter the original draft except the final paragraph where I suggest a blog to follow.

Begin post of 9/12/08

My mind has been on the economy a lot lately. It is not news to anyone that the national and even global economy is not healthy. When commodities, debt, and equity markets are wildy gyrating and the country's biggest banks and financial institutions are struggling for survival, it is clear that there are systemic structural problems. I look at the death spiral of Washington Mutual, Lehman Brothers, the implosion of Bear Stearns, the government takeover of Fannie Mae and Freddie Mac, the unprecedented efforts by the Federal Reserve to loan treasuries in exchange for junk debt to member banks and investment banks, and the list goes on, and I begin to wonder if I am going to wake up to panicked lines at the bank and empty shelves at the grocery store.

It is an immeasurable blessing to be a citizen of this wonderful country, the United States, and to have lived my life in such a time of prosperity, relative peace and unparalleled innovation. But, we are seriously in trouble. We have forgotten our great Constitution. We have permitted our government far too much power. And as government at all levels has meddled and tinkered, sometimes with the best of intentions, and other times purely to accrue more power and money, it has shown almost universal ineptitude in trying to solve problems which can only be solved by free interchange of commerce and ideas.

I am a believer in the free market, and I think the most recent economic catastrophes are the result of greed and unsound investment coupled with government interference which botches almost every problem it tries to solve. I'm an optimist at heart, but there seems to be a perfect storm for a protracted recession or worse.

I follow a couple of blogs, which I started back in 2005 when we were shopping for our most recent home, and the economy was rocketing on loose credit and a huge influx of foreign money.

9/26/09
One of the blogs I follow is globaleconomicanalysis.blogspot.com. I strongly recommend it. Michael Shedlock is right on the money, both in his predictions and his general political principles, and has been now for years.